scion Industrial Engineering Pvt. Ltd.

Global oil prices to climb above $70 per barrel by mid-2021

Global oil prices will climb above $70 per barrel around mid-2021 as improved supply and demand fundamentals beginning May lead to substantial stock draws through to August, according to S&P Global Platts.

The research firm said while large oil consuming countries such as India may crank up the volume over their displeasure and many OPEC+ countries may be eager to ditch compliance to their production-cut deal or push to pump more, both consumers and producers may want to consider the benefits should oil prices stay in their arguable sweet spot.

“While the warning signs over a supply crunch in the coming years are well documented, they have been overshadowed by the pressing needs of consumer economies ravaged by Covid and producer countries crippled by low oil prices,” the firm said in a statement.

It added these very low oil prices along with the energy transition push have accelerated supply concerns. Also, as OPEC+ starts to raise output to meet growing oil demand, the amount of spare capacity in the system begins to dwindle.

The firm expects the amount of crude that can be sustainably produced at short notice halving by September to less than 4 million barrels per day with most of that left in the hands of Saudi Arabia.